Special securities to meet fuel subsidy

New Delhi, Aug 2 | Updated: Aug 3 2005, 05:30am hrs
The Union government has made a provision to issue special securities worth Rs 5,763 crore for liquidating the balance outstanding in the oil pool account. The amount is in addition to the Rs 3,669 crore earmarked by the government in the Budget for 2005-06 to meet the oil subsidy bill.

The additional amount was proposed by finance minister P Chidambaram in the first series of supplementary demands for grants tabled in Parliament on Tuesday. The government proposed an additional expenditure of Rs 14,661.36 crore for 2005-06. It includes Rs 5762.85 crore for meeting the deficit in the oil sector and Rs 500 crore for the recapitalisation of ailing Punjab and Sind Bank.

The total outgo towards the oil subsidy is currently estimated to go up to Rs 9,431 crore as against Rs 3,669 crore mentioned in the Budget. The government in the Budget had estimated a subsidy of Rs 3,600 crore for LPG and kerosene to be supplied through the public distribution system (PDS). The burden of subsidy has gone up because of continual hardening of crude oil prices in the international market.

As the government had failed to revise prices of petroleum products, the state-owned oil companies reported losses during the first quarter of the current financial year. As far as supplementary demands for grants are concerned, they will involve a cash outgo of only Rs 6,818.56 crore and a balance of Rs 7,842.28 crore will be met through savings and enhanced receipts and recoveries from various ministries.